Six Ways to Sink a Growth Initiative

Abstract

The conventional wisdom about how best to pursue growth—launch a slew of initiatives in high-potential areas; appoint some promising young managers to lead them; locate them safely away from the established businesses—is a recipe for failure, according to the authors. Meanwhile, CEOs spend too much time on managing today's earnings and too little time on building the kind of learning organization and culture that growth requires. This article explores six common mistakes that executives make in this arena: 1) Failing to provide the right kind of oversight. The CEO should spend meaningful time with the team and with potential customers; 2) Not putting the best, most experienced talent in charge. Seasoned executives in the core businesses, rather than ambitious young MBAs, should be assigned to growth initiatives; 3) Assembling the wrong team and staffing up prematurely. CEOs should focus on capabilities, not who's available, and staff up only when the strategy, business model, and value proposition are clear; 4) Taking the wrong approach to performance assessment. Milestones relevant to each stage of an initiative's development should be established, and key assumptions in the business plan should be linked to the financial forecast; 5) Not knowing how to fund and govern a start-up. The funding of early-stage ventures should be separated from the corporation's annual budget cycle; 6) Failing to leverage the organization's core capabilities. CEOs must play a central role in helping growth initiatives tap the resources of the core businesses.

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